WHAT IS THE STATUTES OF FRAUD AND WHEN DOES IT APPLY?

The Statute of Frauds Act 1677 governs certain contracts and requires them in writing in order to be legally valid.

CHAMAN LAW FIRM

6/8/2022 2 min read

WHAT IS THE STATUTES OF FRAUD AND WHEN DOES IT APPLY?

A contract is an agreement between two parties to execute certain duties within a stipulated period. Some contracts have certain time frames to be executed and requirements to be performed before they can be duly enforced and become legally binding.

The statute is a common law concept that is used in some jurisdictions to govern contracts and can be raised as a form of defence where there is a breach of contract. Typically, the Statute of Frauds governs contracts of sale of land, contracts of one year or more, guarantor contracts, Sales of goods contracts etc.

Statute of Frauds is covered by the Statute of Frauds Act 1677 and one of the main characteristics that it requires for the contracts states to be written for them to be legally binding. In Nigeria, Contracts for sales of goods that may extend for over a year must be stipulated in writing. In recognition of the growing globalization of the world, Nigeria also recognizes this by giving enforcement to electronic signatures in contracts.

HOW DOES IT APPLY?

The Statute of Frauds was created to prevent (as the name states) fraud in oral contracts created by parties. Sometimes e-mails can satisfy the requirement for an enforceable contract.

The Statute of Frauds applies to certain contracts by listing requirements by which it can be binding. Some of these include:

  • It applies when the contracts it governs are in written form. The language is to be that which is understood by both parties and brings them into an agreement. An oral contract of the kind governed by the Act won't be binding unless it is put into writing. The contract should be written in a manner without complicated/cryptic language.

  • Both parties are meant to agree to the terms listed in the contract. A contract is supposed to be consensual as it consists of an offer and an acceptance. The agreement of both parties is vital to the formation of the transaction.

  • In the United States and other states under the common law rule, the Statute of Frauds covers purchases of goods over $500, land acquisition contracts, contracts with marriage as consideration, executor contracts etc. Some states included contracts involving will, real estate agent commission and others.

  • It applies based on public policy to prevent fraudulent conduct.

There are certain exceptions to the Statute of Fraud, for example, oral contracts that have already commenced. The party would be prevented from going back on the stated terms based on the principle of "promissory estoppel". In the instance where an agreement is sent to the party and they orally agree to the terms of the contract, it becomes binding. There have also been exceptions where an unwritten contract may still be enforceable under the Statute of Frauds.

In conclusion, the Statute of Frauds is applied majorly in specifically listed contracts. One of the major requirements for its application is that it should be a written contract. This Act was originated to prevent issues of corruption and fraudulent/misrepresentation between parties in a contract. The burden of proof is on the plaintiff who claims the defence to prove that the Statute of Frauds was implemented in the making of the agreement.

NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com

WRITTEN BY CHAMAN LAW FIRM TEAM

EMAIL: chamanlawfirm@gmail.com

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